Wednesday , 27 January 2021

MBS MID-DAY: Bond Markets Improve After Data With Help From Europe

By Matthew Graham

Posted To: MBS Commentary

The overnight session was scary for bond markets as 10yr yields rose to test the 2.04 technical level. Interestingly enough, trading went dead flat at the time, and didn’t make a decision on where to go next until after the 8:30am data (roughly 3 hours). With the data coming in weaker than expected (Retail Sales -0.8 vs -0.5 forecast and Jobless Claims 304k vs 285k forecast), the rally began. Not long after the data, MBS and Treasuries were back into positive territory. 10’s encountered initial resistance at yesterday’s lows of 1.974. Trading in European bond markets and Forex heading into the end of the European session helped domestic bonds break through resistance. That’s all the more meaningful considering that bond markets would typically be building in a bit of a concession…(read more)

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